Australia: Review panel delivers recommendations following Fair Work Act review

Following extensive submissions, including by various industry groups and unions, a three member panel (Panel) appointed to review the operation of the Fair Work Act 2009 (Cth) (FW Act) and the extent to which its effects have been consistent with its objects has delivered a lengthy report outlining 53 recommended changes to the FW Act.

Overall, the Panel delivered a clean bill of health in respect of the FW Act, expressing the view that "the system of enterprise bargaining underpinned by the national employment standards and modern awards is delivering fairness to employers and employees".

Importantly, despite widespread malcontent, the Panel indicated that it was not persuaded that the industrial relations system, and in particular the FW Act, was responsible for waning productivity. Nonetheless, recognising the importance of growth in productivity, the Panel sought to minimise constraints on flexibility under the FW Act and which could be removed without significant harm to other objects in the FW Act.

Recommended changes

The 53 changes recommended by the Panel included recommendations regarding:

  • individual flexibility arrangements (IFAs) – it was recommended that provisions dealing with IFAs be amended to make IFAs easier and more attractive, including by:
    • requiring enterprise agreements to include the model flexibility term as a minimum
    • allowing non-monetary benefits to be conferred, provided that the value of monetary benefits foregone are specified in writing, not significant and proportionate
    • extending the required period of notice for terminating an IFA (thus also the minimum term of IFAs) from 28 days to 90 days, or a lesser period if it is agreed between the employer and employee.

The Panel, however, rejected submissions seeking to allow the making of and entry into an IFA a pre-condition to employment.

  • enterprise bargaining and agreement making – the Panel rejected submissions seeking an allowance for employer-only greenfields agreements. Recommended changes included:
    • requiring applicants for a scope order to take "all reasonable steps" to notify all other relevant bargaining representatives
    • allowing Fair Work Australia (FWA) to intervene on its own motion if it considers conciliation could assist in resolving a bargaining dispute, including in respect of a greenfields agreement
    • prohibiting enterprise agreement clauses which permit employees to opt out of the agreement (contrary to the decision in Newlands Coal1)
    • ensuring the better-off-overall-test applied to enterprise agreements is not applied too rigidly and resulting in agreements being inappropriately rejected
    • applying good faith bargaining requirements to the negotiation of greenfields agreements and/or to proposed variations to enterprise agreements.
  • industrial action – the Panel proposed removing the power of the Minister to terminate protected industrial action by declaration pursuant to section 431 of the FW Act, and providing that protected action ballot order applications only be allowed if bargaining for a proposed agreement has commenced (contrary to the decision in JJ Richards2)
  • transfer of business – the Panel recommended amending the FW Act to clarify that where employees at their own initiative transfer to a related entity of their old employer, they will fall outside the operation of mandatory transfer of business provisions and be subject to the terms and conditions of the new employer
  • unfair dismissal, adverse action and general protections – recommended changes included:
    • amending the general protections provisions of the FW Act to provide that the central consideration about the reason for an adverse action is the subjective intention of the person taking the alleged adverse action (contrary to the decision in Barclay3)
    • changing time limits for the making of applications, by extending the time for unfair dismissal applications, and reducing the time for adverse action claims involving a dismissal, to a uniform 21 days
    • in dealing with unfair dismissal applications:
      • increasing FWA's ability to deal with applications on an informal basis
      • providing FWA with discretionary powers to dismiss applications in certain circumstances
      • allowing FWA to make costs orders in limited circumstances, for example where a party has unreasonably failed to discontinue a proceeding or to agree to terms of settlement (that may have led to a discontinuance).

The Panel also proposed a number of changes to provisions dealing with aspects of employees' safety net, such as annual leave and parental leave under the National Employment Standards.

In addition, the Panel recommended that the institutions created under the FW Act, such as FWA, extend their role to include actively encouraging greater productivity. The Panel also recommended that these institutions be renamed to "a title which more aptly denotes its functions", including by removing the words "Fair Work".

Panel rejects calls for easier arbitration and reintroduction of permitted content rules

The Panel indicated that after careful consideration it had rejected some submissions as contrary to the objects of the FW Act. These included some high profiles issues such as:

  • access to arbitration/termination of industrial action – the Panel did not accept that the FW Act should be amended to allow easier access to arbitration of long running disputes, or to provide FWA with further powers to terminate prolonged industrial action, both of which it considered to be measures of "last resort"
  • permitted content – the Panel did not accept that the matters permitted in the negotiation of enterprise agreements should be limited to those outlined in the WorkChoices framework. It formed the view that unlike the WorkChoices regime, the FW Act was consistent with the longstanding "matters pertaining" formula.


Following its release, the Federal Government will undertake a closer review of the report, consider its recommendations and respond in due course.

Just how many of the Panel's recommendations translate into legislative change remains unclear. It is anticipated that further consultation will take place, before the Federal Government determines what, if any, changes it proposes to make to the FW Act going forward.


1 Newlands Coal Pty Ltd v CFMEU [2011] FWAFB 7325 and [2012] FWAFB 721 (affirmed in Queensland Bulk Handling Pty Ltd v CFMEU [2012] FWA 4478)
2 JJ Richards & Sons Pty Ltd v TWU [2011] FWAFB 3377 and JJ Richards & Sons Pty Ltd v Fair Work Australia [2012] FCAFC 53
3 Barclay v Board of Bendigo Regional Institute of Technical and Further Education (2011) 191 FCR 212

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Middletons has been awarded a 2012 EOWA Employer of Choice for Women citation acknowledging our commitment to workplace diversity.

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